Flipping houses looks fun, especially if you watch HGTV and their reality TV series. But is it fun in real life?
It depends on who you talk to. Sure, it can be easy for some, especially experienced investors, but beginners can jump in too – you have to start somewhere, right?
Any investment has its ups and downs, but when you know what to expect and plan for the unexpected, flipping houses can be easier and more fun than many people think.
Here’s what you must know to make flipping houses easy and fun.
It’s Easier When You Work With Reputable Contractors
Don’t try to do everything yourself, but also don’t hire ‘just anyone’ to do the job. Create a network of trusted contractors – people who you know do good work and finish the job on time.
If you don’t have a network of solid contractors, create one. Do your research, get out there and network in your area, and see what you find. Don’t be afraid to ask for referrals or to see the work contractors do. After all, they hold the key to your profits in their hand.
If they hold you up, it costs you money. If they do a bad job, it cost you money. You want contractors on the same page as you and work well with you so you get the job done right the first time.
Watch How Much You Pay
It’s easy to fall in love with the most dilapidated homes and think you can bring them to life. This isn’t reality TV. Even if you can do your magic, look at the numbers, don’t just fall in love with the idea of making an incredible transformation.
Crunch the numbers as many ways as possible so you know what you’re getting into. Plan for the worst – meaning, budget for every possible thing that could go wrong with the home. Then see if it’s still a good buy.
Not only should you know how much the home costs to buy, but how much it costs to fix up and then how much you can sell it for.
If the market isn’t there for what you have in mind, you won’t make the profits you intended. Again, crunch the numbers before you invest.
Always Have Reserves
Again, you never know what might happen to the property. Once the contractors start working, they could find more problems than you anticipated.
A reserve or contingency account is crucial. Plan to have 10 – 20 percent on top of the costs to renovate the home on hand. This way if you run into an emergency you don’t have to stall the renovations until you come up with the capital.
Plan Enough Time
Renovations take time. Don’t rush it and plan to sell before the home is ready. Most lenders won’t let buyers buy a property until you own it for 90 days, so budget to hold the property for at least that long, if not longer.
If you hold the property for at least 180 days, lenders won’t require 2 appraisals, which works in your favor. You’ll have a better chance of getting what you want for the property and you won’t have to cover the cost of the 2nd appraisal as it’s the seller’s responsibility.
Work With A Licensed Real Estate Agent
It’s tempting to try to do everything yourself to save money, but it takes more time, which often means wasting money.
Working with a licensed real estate agent does a few things. First, it frees up your time. Marketing a home and getting it in front of buyers is hard work. A licensed real estate agent already has networks and the ability to market your property much easier and faster than you.
A licensed real estate agent may even be able to get you more for the property. When marketed right and to the right audience, there’s a chance of getting the price you want for the home. Trying to do it yourself can be too overwhelming and frustrating leading to less than optimal negotiations and a lower sales price than you hoped.
Flipping Houses Is Like A Job
You have a lot at stake when you flip houses. It’s like a full-time job, especially when you’re in the renovation stage. From start to finish it could take months or even a year. Buying the property is just the start of the process – securing funding, passing the appraisal, and figuring out the necessary work.
Once you own the home, the real fun begins. You’ll either be the contractor or manage them, which is a big job. Then, you have to stage the home, find a real estate agent, list it, and sell it.
Plan to spend a lot of time and effort on a fix and flip even if you don’t do any of the work yourself.
Fix And Flips Can Be A Good Investment
Even though fix and flips are a lot of work, they can pay off in the end. It comes down to knowing where to invest, what to invest in, and when.
Timing and location are everything. Working with a reputable hard money lender to get the funding, contractors to do the work, and a real estate agent to help you sell the property is the key to having fun while flipping homes.
It’s hard work, but hard work pays off. Once you flip one home, you can build your portfolio and keep the ‘job’ going. Whether it’s your source of passive income to save for retirement, or you flip homes for a living, there are plenty of ways to have fun whether it’s a side job or your main source of income.